We have already written that the property owned by the state or a territorial community must generate profit or be used for the intended purpose. First of all, this is because an adequate public property is an important part of a country’s economic development. Here’s what we suggest you explore today: what is the sale of the national and municipal property, and what types of management of this property are there?
The management of the national and municipal property is more of an umbrella term. It covers the possession, use and disposal of property by the national or local government. Let’s take a look at the basic ways of this management:
Possession of the national and municipal property means that national or municipal agencies can hold a certain object – hold it and put it on their balance sheet. For example, the council of your city may own a computer. It may be used by the mayor, or the computer will collect dust in the warehouse of some utility. Possession means that the owner has a material connection with the property and the owner of the property decides whether to use this property.
National and local authorities may use the property for its intended purpose to ensure its executive functions. For example, the State Border Guard Service of Ukraine may have a vehicle on its balance sheet. Accordingly, border guards may drive this vehicle to perform their official duties. That is, the State Border Guard Service of Ukraine manages this property through targeted use.
Authorities and local governments may dispose of public property in different ways. For example, property can be transferred into temporary or permanent ownership to individuals / legal persons. The most popular are the sale or transfer for temporary paid (or even free) use to others. In other words, it can be privatization and lease.
Privatization is the alienation of public property from national or municipal owners to private ones. In Ukraine, privatization takes place on a competitive basis through electronic auctions. The privatization process is regulated by the Law of Ukraine “On Privatization of the National and Municipal Property.”
One of the largest e-auctions in the history of privatization in Ukraine is the sale of the Dnipro hotel in the capital. The starting price at the auction was UAH 80.92 million, and the winner of the auction paid UAH 1.1 billion.
Also, the national or local authorities may lease property. In fact, individuals or legal persons may use the national and municipal property on a fee basis. For example, the council of your city may own a space leased to a private entrepreneur for a café. This way, the council receives additional budget revenue, which will help to improve the quality of life of community members.
The process of leasing the national and municipal property is regulated by the Law “On Lease of the National and Municipal Property.”
How do they decide what to sell and what to lease?
Before selling the property, the government or community decides which items of all the property will go for privatization and which will go for lease. First of all, it is necessary to approve the list of privatization objects or the list of leases.
For example, the city council of Zhytomyr wants to sell 5 placements and lease 10. To make this decision, the members of the Zhytomyr City Council should consider this question in plenary session and approve the lists for privatization and rent.
Within 5 working days, the lists must be made public in the form of decisions on the official website of the City Council.
This information can be found in the “Documents” section and by searching for “council decisions” on the website. When searching for such decisions, you should use the keywords “privatization” / “lease.”
These lists should also be made public by the city council in the Prozorro.Sale system. This information can be found on the official web portal of the system. You can use the “Registers” filter above the search line, and then select “Privatization Objects” or “List of Property (Lease)”. For a more detailed search, you should use other criteria – by keywords, region, asset holder property, etc.
We will tell you about the sales and rental processes in our next materials.